How to Start a Food Truck Business
The food truck business is one of the fastest growing industries due to its comparatively low-risk, low-cost startup profile. They’re cheaper to setup than bricks-and-mortar eateries and they have been embraced by the food-loving public.
However, don’t be fooled. A food truck business is still difficult to get of the ground: it’s hard work, the hours can be long and your business is more affected by the weather. But if you love food, don’t mind grafting and you have a plan, starting a food truck may be just perfect for you.
Questions to answer before starting a food truck business
- How many hours are you prepared to put in?
- What times and days will you work?
- Are you on your own or do you have people to help you?
- What type of food do you want to serve?
- What type of food do customers want?
- What type of food is missing from the market?
- Are there other food trucks doing something similar?
- How can you differentiate your offer from your competitors?
- How much money do you have to raise to get started?
- Who will produce the food?
- How much do you need to earn each day, week and month to cover your costs?
Operational factors of running a food truck business
- Make it legal. Before you invest any money, make sure you can obtain a business licence for your food truck business. Depending on where you live, these can be difficult to obtain/have strict operational criteria attached.
- Find your wheels. Have you got a vehicle in mind?
- Think about your brand. What will your truck look like? Why will customers like your food? Are you going for quality or low prices? Think about how you want to be thought of by your customers. What do you want to be known for?
- Get financing. Do you have or can you raise the necessary finances? How will you raise the money?
- Have enough cash. How much money will you have at the start of your business? You need a buffer of cash before you begin, to cover salaries, stock, fuel and other costs.
- How much time will you dedicate to the business, i.e. is it full-time, part-time, ad-hoc, seasonal?
- Standard or unusual? Are you planning to sell something familiar or are you going for more exotic fare?
- What do you want out of your food truck business? e.g. is it full-time or part-time; do you want to expand the business to multiple trucks/locations? Do you want to franchise the business? Do you need a full-time income out of it or is it just beer money? Is it a hobby or is it a serious business?
- How will you promote your food truck business? How will you maximise sales? How will you attract customers? Are you planning to offer promotions? Loyalty programs?
Contact your local government for compliance regulations
Before you do anything else, contact your relevant government agency and ask them what it takes to open a food truck business in your locale. They will set you on the right – and legal – path to starting your business and help you avoid nasty surprises down the line.
Depending on where you plan to operate, it may be difficult to find a good location for your food truck. A combination of limited supply, parking laws, community objections and local government policy may make finding a location near-impossible or may throw a spanner in your finely-tuned business plan.
Calculate your costs
Draw up a basic budget. List the following costs:
- Truck fitting costs, i.e. commercial kitchen installation
- Vehicle maintenance
- Legal costs
- Financing costs, i.e. repayments, interest etc.
- Insurance – vehicle and employer
- Fuel – petrol, electricity, gas
You may be surprised by the figure but remember, a food truck can be very profitable. This exercise is not designed to put you off but to ensure you go into this with eyes wide open.
Types of food truck
Generally speaking, there are two types of food truck:
- A mobile food preparation vehicle (MFPV) – this allows you to cook the food fresh on-site, as your customer orders it.
- An industrial catering vehicle (ICV) – this truck allows you to sell pre-packaged food. There is no cooking facility on board.
Planning your menu
Your recipes are your secret weapon. They’re what separate you from your competitors. They’re what your customers fall in love with and tell others about.
- What food can you cook?
- What food can you produce cost-effectively whilst maintaining quality?
- What food can you make in bulk?
- What food can you transport easily?
- What food is easy to prepare/serve?
- Are there any foods where you can add a twist – something your customers will value that they can’t get elsewhere – maybe a speciality dish.
- What food is easy for your customers to eat/take away?
- What food will give you the best profit margin?
- What foods aren’t being sold by your competitors?
- How big is your menu? Tip: keep it small-ish and manageable.
- Think about portion size.
Once you have brainstormed some recipes, start researching the best recipes you can find. Start cooking, testing and perfecting each item. This is the fun part!
Do all the recipes you’ve chosen form a food offer that makes sense? Do you have a range of foods that complement each other?
Start to finalise your menu, deciding what food and drink you will offer.
Set your prices
In the food business, a good rule of thumb for setting your food prices is to multiply the ingredient costs by three to arrive at your selling price. For bottled drinks, multiply by two. Of course, these are only guidelines and you may want to depart from this on occasion, but it’s a good starting point.